Notes to Accounts of PDS Multinational Fashions Ltd.

Mar 31, 2015

Note 1: LEASES

Asset Taken on Lease

(a) The Company has taken immoveable property located at Bangalore on
lease. The lease agreement is valid till September, 2015 and lease
rentals(including transfer to lease equalisation reserve) amounting to
Rs. 1,866,552 (March 31,2014: Rs. 1,894,706) has been debited to the
Statement of Profit and Loss during the year in pursuance of Accounting
Standard - 19 " Leases" notified under Company (Accounts) Rules 2014.
Future minimum lease rentals as on March 31, 2015 are as under:

Note 2: The Company has not spent any amount towards Corporate Social
Responsibility during the financial year 2014-15. As certified by the
Management and as per sub-section (1) of Section 135 of the Companies
Act, 2013 read with Rule 3 of Companies (Corporate Social
Responsibility Policy) Rules, 2014; the Company is not required to
spend any amount towards CSR activities during the financial year
2014-15.

Note 3: In view of the management, the Current Assets, Loans &
Advances have a value on realization in the ordinary course of business
at least equal to the amount, at which they are stated in the Balance
Sheet as at March 31, 2015.

Mar 31, 2014

Note 1. Corporate Information

Pearl Global Industries Limited is a public limited company domiciled
in India and incorporated under the provisions of the Companies
Act,1956. The company is primarily engaged in manufacturing, sourcing
and export of ready to wear apparels through its facilities and
operations in India and sourcing overseas. It''s shares are listed on
BSE and NSE in India.

Note 2

2.1 Basis of Preparation

i) The financial statements of the Company have been prepared in
compliance with Generally Accepted Accounting Principles in India
(ÂGAAPÂ) and mandatory accounting standard issued by the Companies
(Accounting Standard) Rules 2006 (as amanded from time to time) the
relevant provisions of the Companies Act, 1956 and other applicable
statutes under the historical cost convention and on an accrual basis
of accounting exept investment available for sale and held for trading
is meausred at for value and land and building which is measure at
revalued cost. The company has complied in all matiral respect with
Accounting Standard notified under the Companies Act, 1956 read with
general circular 8/2014 dated 4 April 2014 issued by the Ministry of
Corporate Affair. The acounting policies adopted in the preparation of
financial statements are consistent with those of previous year

2.2 Uses of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires making of estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets & liabilities at the date of
financial statements and the reported amounts of revenues and expenses
during the reporting year. Differences between the actual results and
estimates are recognized in the Statement of Profit & Loss in the year
in which the results are known /materialized.

(A) Terms/rights attached to equity shares

The company has only one class of equity shares having per value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The company declares and pays dividends in Indian rupees. For
the year ended March 31, 2014, the amount of Rs. 2 per (March 31, 2013: Rs.
1 per share) share has been proposed to be declared as dividend for
distribution to equity shareholders. The dividend proposed by the Board
of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.

a. In case of secured loans, the nature of security are:

(i) The Loan from Kotak Mahindra bank was secured by exclusive first
charge on immovable property located at Plot No. 10; Sector - 5 ,
Growth center, Bawal. However, during the year ended March 31, 2014 the
bank released the charge from such property and presently the loan is
(with effect from Aug 2013) secured by charge on immvobale property
situated at Plot No. 446, Phase-V, Udyog Vihar Industrial Estate,
Haryana. The loan is also secured by personal guaranter of the
Promoter director.

(ii) Term loan from Axis bank is secured by equitable mortgage on
property situated at plot no. 21/13-X, Block-A, Naraina Industrial
Area, Phase-II, New Delhi owned and guaranteed by the promoter
directors of the company. The account was repayable Rs. 909,600 p.m. by
January 2016. However, the loan account is preclosed and outstanding
amount is fully paid before the reporting date. Accordingly, the
security corresponding to this loan has also been released as of the
reporting date.

(iii) Vehicle loans are secured against hypothecation of respective
vehicles.

b) Loan from Directors: Loan from directors is repayable on demand,
taken during ordinary course of business.

2. The Depreciation of Rs. 97,461,842 for the year includes depreciation
of Rs. 19,690,911 on assets transferred under scheme of Demerger through
column "Depreciation- Deletion on account of Demerger" in the above
chart. Therefore, depreciation for the year charged to statement of
Profit & Loss is Rs. 77,770,931.

3. In the earlier years, the company had initiated the process of
converting its leasehold land into freehold land. However, the deed is
yet to be transferred in the name of the Company as at March 31, 2014.

4. Opening balance of land includes Rs. 45,229,131 on account of
revaluation on 31.03.2002.

5. Opening balance of building includes Rs. 5,932,276 on account of
reduction in revaluation on 31.03.2002.

6. Cost of Land Include Rs. 3,070,006 (March 31, 2013: Nil) being
borrowing cost capitalised in accordance with Accounting Standard AS-16
on "Borrowing Cost" as specified in the Companies Accounting Standard
Rules 2006.

7. The above includes the amount of Land of Rs. 15,954,319 (March 31,
2013 : Rs. 15,954,319) & Building of Rs. 23,434,599 (March 31, 2013 : Rs.
23,434,599) situated at Narshingpur, Tehsil District gurgaon for which
the company has executed an agreement for the construction of
commercial project with DLF Retail Developers Ltd. on November 30th
2007. However, as certified by the Management, the work has not started
during the financial year 2013-14.

(I) The Company has classified the various benefits provided to
employees as under:-

(i) Defined Contribution Plan

The company makes contribution towards provident fund & employee state
insurance (ESI) as defined contribution retirement plan for qualifying
employees. The provident fund plan is operated by the Regional
Provident Fund Commissioner and the company contribute a specified
percentage of payroll cost to the said schemes to fund the benefits.

Durint the year, the company recognized Rs. 23,866,590 (March 31, 2013: Rs.
23,967,776) for provident fund contributions & Rs. 9,302,594 (March 31,
2013 : Rs. 10,083,333) for ESI in the Statement of Profit and Loss The
contributions payable to these plans by the company are at rates
specified in the rules of the schemes.

(ii) Defined Benefit Plan: It includes:

a) Contribution to Gratuity Fund maintained by Life Insurance
Corporation of India in case of Gurgaon Division (Funded)

b) Gratuity in case of Chennai Division (Unfunded)

c) Leave encashment/Compensated absence (Unfunded)

In accordance with Accounting Standard 15 (revised 2005), an acturial
valuation is carried out in respect of aforesaid defined benefit plans
and other long term benefits based on the assumption given in the table
with subheading ''e'' below. The present value of obligation is
determine based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation. The obligation for leave
encashment is recognized in the same manner as gratuity.

vi) Counter Guarantees given by the company to the Sales Tax Department
for its associates company Rs. 100,000 (March 31, 2013: Rs. 100,000), for
others Rs. 50,000 (March 31, 2013: Rs. 50,000).

D. Scheme of Arrangement

During the year, consequent upon sanction of ÂScheme of ArrangementÂ
(the Scheme), for demerger of the Sourcing, Distribution and Marketing
Business of the Company (hereinafter referred as ÂDemerged
UndertakingÂ) into PDS Multinational Fashions Limited (ÂTransferee
CompanyÂ), as approved by the HonÂble High Court of Delhi vide its
Order dated March 10, 2014 u/s 394(2) of the Companies Act, 1956 and
subsequent filing of said Order with the Registrar of Companies, NCT of
Delhi & Haryana on May 13, 2014 being the ''Effective Date'', the
financial statements of the Company have been prepared in accordance
with the relevant clauses of the Scheme as under:- i) The demerger has
been accounted for under the Âpooling of interestÂ method as prescribed
by the Accounting Standard (AS-14) of the Company (Accounting
Standards) Rules, 2006. Accordingly, for the year ended March 31, 2014,
all assets and liabilities of the ÂDemerged UndertakingÂ have been
transferred to the Transferee Company at the book values with effect
from April 01, 2012 being the ÂAppointed DateÂ resulting into a
reduction in ÂShare Premium AccountÂ by Rs. 10,677.74 Lacs. Further,
there is no difference in accounting policies between the Company and
the Transferee Company; hence no adjustments have been made.

Note 3: Lease

a) Asset Given on Lease

(i) Minimum Lease Payments Receivables

The company has given certain assets on operating lease and lease rent
(income) amounting to Rs. 73,136,469 (March 31, 2013 : Rs. 65,129,536) has
been credited in the Statement of Profit & Loss. The future minimum
lease payments receivable and detail of assets as at March 31, 2014 are
as under:

Note 4: Currency Derivatives

The company utilizes currency derivatives to hedge significant future
transactions and cash flows and is a party to a variety of foreign
currency contracts and options in the management of its exchange rate
exposures. The Company has no outstanding derivative financial
instrument as at the balance sheet date except for forward currency
contracts as below:

These commitments have been entered into by the Company to hedge
against future payments to suppliers and receipts from customers in the
ordinary course of business. These arrangements are designed to address
significant exchange exposures and are reviewed/ renewed by the
Management on a revolving basis as required.

b) The terms of the forward currency contracts has been negotiated to
match the terms & commitments of receivables and payables. The cash
flow hedges of the expected future receivables/ payables in April 2014
to March 2015 is assessed at a profit of Rs. 25,621,584 (March 31, 2013 :
Loss of Rs. 43,978,918) as on repor ting date.

Note 5: In view of the management, the current assets, loans and
advances have a value on realization in the ordinary courses of
business at least equal to the amount, at which they are stated in the
Balance Sheet as at 31st March, 2014.

Note 6: There is no reportable segment of the company in view of the
Accounting Standard -17 ''Segment Reporting'' as issued by the Companies
(Accounting Standards) Rules, 2006

Note 7: The Company has established a comprehensive system of
maintenance of information and documents as required by the transfer
pricing legislation under sections 92-92F of the Income Tax Act 1961.
Since the law requires existence of such information and documentation
to be contemporaneous in nature, the Company is in process of updating
the documentation for the International transactions entered into with
the associated enterprises during the period as required under law. The
Management is of the opinion that its international transactions are at
arm''s length so that the aforesaid legislation will not have any impact
on the financial statements, particularly on the amount of tax expense
and that of provision for taxation

PDS Multinational Fashions Limited is a limited Company domiciled in
India and incorporated on April 06, 2011 under the provisions of the
Companies Act,1956.

A. Terms/rights attached to Equity shares

The Company has only one class of equity shares having a par value
of Rs.10 per share.

Each holder of Equity shares is entitled to one vote per share. In the
event of liquidation of the Company, the holders of equity shares will
be entitled to receive remaining assets of the Company, after distribu
-tion of all preferential amounts. The distribution will be in proportion
to the number of equity shares held by the shareholders.

Note 2: In view of the management, the current assets have a value on
realization in the ordinary course of business at least equal to the
amount, at which they are stated in the Balance Sheet as at March 31,
2013.

Note 3: There is no reportable segment of the Company in view of the
Accounting Standard-17 "Segment Reporting" as issued by the Companies
(Accounting Standard) Rules, 2006.